Photos by Getty Photos; Illustrations by Bankrate
Alternate-Traded funds, or ETFs, have grow to be some of the standard funding merchandise in latest a long time. They will present entry to numerous portfolios at a low value via a single funding fund. It additionally permits for diversification throughout asset lessons by retaining a small variety of low-cost ETFs.
Nevertheless, sure corporations are so broadly sure within the funding world that they are often uncovered to extra shares than chances are you’ll discover. This is an summary of ETF overlaps, why it issues, and decide in case your portfolio is simply too centered on a specific inventory.
What’s ETF duplication and why must you care?
ETF overlap happens while you maintain a number of ETFs which are invested in the identical underlying safety. That is vital as a result of most individuals put money into completely different ETFs to advertise diversification of their portfolios, but when these funds maintain the identical securities, the advantages of diversification lower.
For instance, for instance you might have an ETF that tracks one other ETF that tracks your S&P 500 and Nasdaq 100. You could be shocked to see plenty of publicity on the earth’s greatest tech corporations, together with NVIDIA (NVDA), Microsoft (MSFT), and Apple (AAPL). Chances are you’ll need to discover one other ETF in your portfolio that may improve the advantages of diversification.
Please be aware that this concern can come up from holding completely different mutual funds in addition to ETFs. The idea of overlapping holdings might also be generally known as fund overlap or belongings overlap.
How you can test in case your portfolio is simply too concentrated
There are not any strong guidelines for when your portfolio is simply too concentrated. Whereas some traders might really feel happy with the next focus stage, others might favor to diversify as a lot as attainable. The important thing to understanding ETF duplication is to make your portfolio conscious of publicity.
Nevertheless, in case you discover that a number of ETFs in your portfolio have sure safety, you might want to think about how a lot of your portfolio is invested in a single inventory. You could be shocked that one or two corporations account for greater than 5% of the entire portfolio. On this case, you would possibly think about diversifying into much less overlapping funds to cut back publicity to single shares.
Let’s check out the highest holdings of two standard ETFs and see how they overlap. SPDR S&P 500 ETF Belief (SPY) and Investco QQQ ETF (QQQ) are sometimes used to supply portfolio development for traders. This is how the highest 10 holdings as of August 2025 are in contrast:
| SPDR S&P 500 ETF Belief | Investco QQQ ETF | |
|---|---|---|
| 1 | nvidia | nvidia |
| 2 | Microsoft | Microsoft |
| 3 | apple | apple |
| 4 | Amazon.com | Broadcom |
| 5 | Meta Platform | Amazon.com |
| 6 | Broadcom | Meta Platform |
| 7 | Alphabet Class A | Netflix |
| 8 | Alphabet class c | Alphabet Class A |
| 9 | Tesla | Tesla |
| 10 | Berkshire Hathaway | Alphabet class c |
You possibly can see that there’s a lot of overlap between the 2 funds. So, in case you are making an attempt to learn from diversification in your portfolio, it does not make a lot sense to maintain each.
Additionally it is price being attentive to the varied expense ratios. The Traders QQQ ETF expenses 0.20% (or $20 for an funding of $10,000 per 12 months), whereas the SPDR S&P 500 ETF Belief expenses 0.095% (or $9.50 for an funding of $10,000 per 12 months).
There are a number of instruments that may provide help to consider overlaps between completely different ETFs. This is the very best:
- ETF Analysis Middle: This web site means that you can enter any two ETF tickers and immediately see how your holdings overlap. You possibly can see the varied weights and complete variety of overlapping holdings for every fund.
- ETF.com: This web site means that you can simply examine two completely different ETFs and consider greater than overlapping holdings. You possibly can see how funds differ when it comes to prices, belongings, efficiency, and extra.
- ETF Database: Moreover, utilizing an ETF database means that you can examine completely different ETFs, simply see how comparable their holdings are and the way funds are in contrast with methods and different vital variables.
Conclusion
The overlap between the shares you personal within the varied ETFs you’re investing in could make your portfolio much less numerous than you assume. Watch out for ETF overlap in your investments and make sure the diversification you’re in search of.
In case your portfolio has many overlaps, you may think about integrating your holdings right into a fund or diversifying right into a fund with fewer overlaps, as the prices are low. Luckily, there are various instruments that may provide help to examine completely different funds and establish attainable overlapping points.
Editorial Disclaimer: All traders are suggested to conduct their very own unbiased analysis into funding methods earlier than investing determination. Moreover, traders advocate that previous funding merchandise efficiency just isn’t a assure of future worth will increase.